Iraq

A new Arbitration Law in Iraq

Arbitration is a widely recognized as the preferred method of resolving commercial disputes around the world. It offers parties the benefits of flexibility, confidentiality, efficiency, and enforceability of awards. However, in Iraq, arbitration is still governed by provisions of the Iraqi Code of Civil Procedures no 83 of 1969, which do not reflect the modern standards and practices of international arbitration.

The lack of a comprehensive and modern arbitration law in Iraq poses significant challenges for businesses and investors who wish to resolve their disputes through arbitration, especially when it comes to the enforcement of foreign arbitral awards in Iraq. The Iraqi courts have historically been reluctant to enforce foreign awards, citing various grounds such as public policy, sovereignty, and jurisdictional issues.

As industry experts, we have been actively involved in the dialogue with the legislative and judicial authorities in Iraq to raise awareness of the importance of having a new arbitration law and enhancing the enforcement regime of foreign arbitral awards in Iraq.

Jawad Khalaf
Partner,
Head of Litigation - Iraq

Recognizing the need to reform the arbitration regime in Iraq, the legal community including Al Tamimi & Company, multinational companies and UN entity representatives, have been advocating for the enactment of a new arbitration law that is in line with the United Nations Convention for the enforcement and recognition of foreign arbitral awards 1958 (The New York Convention), which Iraq ratified in 2021. The ratification of the New York Convention was a significant step towards improving the arbitration landscape in Iraq, as it obliges Iraq to recognize and enforce foreign awards, subject to limited exceptions. However, the ratification alone is not sufficient to ensure the effective implementation of the Convention, as there are still gaps and ambiguities in the existing legal framework that need to be addressed by a new law.

As industry experts, we have been actively involved in the dialogue with the legislative and judicial authorities in Iraq to raise awareness of the importance of having a new arbitration law and enhancing the enforcement regime of foreign arbitral awards in Iraq. We have also been providing our insights and recommendations on the key features and principles that should be incorporated in the new law, such as the autonomy of the parties, the competence of the arbitral tribunal, the minimal intervention of the courts, and the simplified and expedited enforcement procedure. We believe that these elements are essential to create a conducive and attractive environment for arbitration in Iraq, which will in turn support the development of the business and investment sectors in the country.

We are optimistic that the Iraqi government is committed to issuing a new arbitration law in the near future. We have yet to see a draft of the law issued by parliament, but we anticipate that the law will be drafted, published, and enacted during the course of 2024, given the continuous pressure and demand from the legal community and the stakeholders. We are also eager to see the first enforcement of a foreign arbitral award in Iraq since the ratification of the New York Convention, which will be a milestone and a test case for the arbitration practice in Iraq.

We will continue to monitor the progress and developments of the arbitration law in Iraq and provide our clients and partners with the latest updates and guidance on how to best protect and enforce their rights and interests through arbitration in Iraq.

Contact Partner:
Jawad Khalaf

Contributing Authors:
Zainab Saad
Zane Anani

New Horizons: Legal and Regulatory Reforms in Iraq

In light of Iraq's advancing political stability and a forward-looking Federal Budget, the Iraqi government has declared much-anticipated reforms in crucial national sectors. With Iraq's population increasing swiftly and the country's considerable susceptibility to climate change, there is a pressing need for economic diversification beyond the predominantly oil-based economy.

Some examples of the new and upcoming laws and regulations include:

Currency Regulation Amendments: In 2023, the Iraqi Council of Ministers issued a decision in relation to the adoption of the Iraqi Dinar. Pursuant to this decision, the private and public sector must adopt the Iraqi Dinar and the official rate of the Central Bank when offering their products and services.
The Council of Ministers and Central Bank of Iraq have taken careful steps towards de-dollarising the Iraqi economy. The use of US dollars will still be permitted in Iraq however, if an exemption and exception applies.
Central Bank of Iraq: Important changes with respect to external transfer mechanisms will be made this year. In a recent press conference, the Governor of the CBI stated that the CBI will abandon the processing of external money transfers on the CBI’s electronic platform and instead rely on correspondent banks completely next year.

These significant legislative developments indicate that Iraq is making notable strides in its efforts to diversify its economy, moving away from an overreliance on oil. In light of fluctuating global energy prices, these steps toward diversification will likely enhance Iraq's resilience against market volatility and international economic downturns.

Mohammed Norri
Partner,
Head of Office - Baghdad

Instructions regulating the new Pensions and Social Security Law: In light of the enforcement of the new Law, it is high likely that the Ministry of Pension and Social Security will issue new instructions clarifying certain articles of the law.
Law of Metallic Investment: This draft law was discussed in Parliament last year and it is anticipated that it will be passed in 2024. The law aims to encourage investment in metals and other minerals and is expected to replace Law No. 91 of 1988.
An amendment to the Industrial Investment Law: The latest amendment was discussed in Parliament in January 2023. If approved, the amendment will include important provisions governing industrial investment projects.
Anti-Terrorism Law: The draft law was debated in Parliament for the second time in September 2023. If approved, the law will address terrorism crimes and will be read alongside the Iraqi criminal code.
Communication & Media Commission Law: This draft law was discussed in Parliament in February 2023. If approved, the law will replace Declaration No. 65 of 2004.
Information and Telecommunication Law: This draft law aims to regulate telecommunication and information transactions and create the authorities responsible to oversee operations.

In our most recent Law Update edition, we've published an article focusing on the limitations on using USD currency in Iraq, where we delve deeper into the restrictions imposed and the measures implemented by the CBI and the Council of Ministers to diminish reliance on external currencies. Since the beginning of 2023, the Iraqi government has been actively working to restore trust in the Iraqi currency, and we continue to observe this positive momentum with their recent decision to settle any governmental contracts concluded in US dollars in IQD at the official exchange rate. To read more, click here.

These significant legislative developments indicate that Iraq is making notable strides in its efforts to diversify its economy, moving away from an overreliance on oil. In light of fluctuating global energy prices, these steps toward diversification will likely enhance Iraq's resilience against market volatility and international economic downturns. This shift is crucial for the nation's ability to support its expanding population and to implement additional significant reforms aimed at attracting international investments.

Contact Partner:
Mohammed Norri

Contributing Authors:
Zainab Saad
Zane Anani

An overview of the new Commission for Nuclear, Radiological, Chemical and Biological energy law

The Iraqi Parliament approved a new draft law regulating nuclear, radiological, chemical and biological energy on 16 October 2023. The law is yet to be published in the official gazette. The purpose of the law is to ensure the safe use of nuclear power in the medical, agricultural, industrial and educational fields. This is a positive development towards achieving better operating conditions and the prevention or mitigation of accident consequences, resulting in protection of workers, the public and the environment from nuclear related hazards.

The law will ensure the security and treatment of radioactive waste and prevent non-peaceful uses of it to protect workers, the environment, and society from the risks arising from activities subject to control.

Mohammed Norri
Partner,
Head of Office - Baghdad

In addition to ensuring security and safety in the field of peaceful uses of atomic energy in accordance with the principles and standards of the International Atomic Energy Agency, the law also aims to control chemical and biological materials, ionizing radiation, and atomic energy for peaceful uses. The law will ensure the security and treatment of radioactive waste and prevent non-peaceful uses of it to protect workers, the environment, and society from the risks arising from activities subject to control.

Pursuant to the law, a National Authority for Nuclear, Radiation, and Biological Safety (the “Commission”) will be established to oversee the implementation of the law. The Commission will be directly related to the council of ministers and will have its own legal personality. The Commission will oversee the activities defined in the law as “regulated activity”. Regulated activity is defined in the law as any activity related to nuclear, radiological, chemical and biological materials, including every manufacture, design, construction, import, export, sale, loan, authorization, use, operation, maintenance, possession, reuse, decommissioning, or treatment of contaminated sites, liquidating nuclear facilities, managing or disposing of radioactive waste, or discharging releases into the environment.

Once the commission is formed it will replace the current authorities that oversee the regulated activities such as the Iraqi Authority for Protection from Radioactive Sources, the Radiation Protection Center, and the National Oversight Authority.

The role of the new Commission and its responsibilities are set out in the new law. The head of the Commission will draw, develop, and prepare the necessary plans and programs for the implementation of the Commission’s policies. Additionally, any regulated activity cannot be undertaken before obtaining a license from the Commission. The license requirements shall be issued and published later by a decree which will be issued by the Prime Minister.

It is possible this draft law will be amended again before it is published in the official gazette as members of parliament will be invited to comment on the draft law. We expect the law to be published in the first quarter of 2024 and become effective from the date of publication.

Contact Partner:
Mohammed Norri

Contributing Authors:
Zainab Saad
Zane Anani